The homes will be for rent and for sale to working households who are struggling to get mortgages to buy their first home.
The Council is currently finalising negotiations to buy 19 new homes from PARC. The homes will form part of the ongoing regeneration of Craigmillar.
Councillor Norman Work, Vice Convenor of the Health, Social Care & Housing Committee, said: "There remains an acute shortage of affordable housing in the city. This has been made worse as potential first time buyers find it more difficult to get mortgages in the current climate.
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"These new homes will give a much-needed helping hand to working households who are currently battling to find a home. This move also demonstrates the continued commitment of the Council to the regeneration of Craigmillar, and to mixed tenure housing."
The homes purchase is part of a wider strategy to meet the chronic shortage of housing in the city, which includes increasing the supply of affordable rented homes.
The 19 properties will be advertised at below market rent.
Betty Stevenson, Convenor of Edinburgh Tenants Federation, said: "I'm delighted by the action the Council is taking, it's an important first step. In the present housing crisis, homes are even more desperately needed than ever before, especially social housing."
John Quinn, general manager, PARC, said: "Due to the current market many homebuyers are still struggling to enter the property market and this is one of the ways that PARC is working with the Council to actively help people find homes.
"PARC is committed to delivering real benefits to the area through its ongoing regeneration and to providing much-needed affordable homes and we believe that integrating different housing tenures is an important part of development at Craigmillar."
(GK/JM)
